Is it risky to keep the money on the internet?

Usually, when we have bear markets, there is a common thought about keeping our investments safe. Some people do a panic sale and convert their crypto as stable coins. Some people who don't even believe in stable coins, take the money to the real world. These are some common things that happen now and then in the crypto world.

Coming to the topic, yeah I think it is not very safe to keep all our money on the internet. Basically, crypto investments are more like keeping the money on the internet. There are some possibilities where the data can be manipulated if our investments are in centralized exchanges. Even in some cases, Blockchains are also not fully 100% tamper-proof. Say for example if only 10 people are running a node for a blockchain, they will be able to change the balance in a wallet with the approval from all the 10 people. That's one of the reasons why the number of different users operating a node is very important.

Source

There were also events similar to such that happened on Steem blockchain when the company Steemit was acquired by Justin Sun. The balance of the accounts was altered and the money was taken out of supply with the help of 20 sock puppet witnesses. So, it is important to understand the risks of crypto investments or anything to do with money over the internet. I'm not saying all these to scare anyone but just as an awareness initiative.

Private internets can be a problem

Some countries have private internet. If we are planning to move from one country to another for some reason, we have to also understand how the internet works there. Otherwise, communications with the outside world can be a big problem. I heard there are some similar restrictions in North Korea and it is hard for someone to break those rules and live there. Private internet especially can be a very challenging thing.

Even in the current internet itself if our Internet Service provider restricts our access to some of the crypto cloud wallet sites or crypto websites, our money is already gone. In some cases, VPN can help but we cannot guarantee that either.

In some countries, the crypto regulations are not pretty clear. Only now India has announced that there will be a 30% flat tax on crypto earnings. But before that, the situation was not clear at all. What if suddenly overnight the government starts taking all the crypto investors into radar and start monitoring them closely. In this case, the private internet may not even be the real problem. The actual problem would be the restriction from the government end itself. But they might as well decide about implementing private internet for the entire country.

Source

Hardware wallets can be a good move

Hardware wallets are good in all these scenarios. It doesn't mean that we have to all move our funds completely from other places to hardware wallets. But comparatively, I believe keeping our major holdings in hardware wallets would be safer compared to keeping it in exchanges. We can still keep our money in cloud wallets and exchanges but how much is what matters. We can just keep a little on the exchanges and move the remaining to the secure wallets.

As long as our private keys are pretty safe, the other wallets are also safe to some extent. We can always get back and reach out to our funds if we keep them on a hardware wallet. There are also backup mechanisms available that can be used only by authorized individuals. This gives multiple protection in my opinion.

Posted Using LeoFinance Beta